Reality kicks in when the year or actual date of your retirement is around the corner and you realize that your retirement finances aren't what you had thought they would be. For many, this means their retirement includes part time employment or not retiring at all. Harsh lessons, which can be avoided if you take the advice found in "3 Retirement Errors to Avoid" from CPA Practice Advisor.
Unfortunately, many folks don't spend a lot of time even thinking about retirement because they think it's a far-off time when money will have magically accumulated. That means no money to buy the condo in Cozumel, pay for the grandkids' education, or live a life of leisure. Someone in this situation might have to find a part-time job to make ends meet—and it's not out of the question that they could outlive their money. Don't end up without the money you need for retirement. Avoid these common mistakes.
- Not understanding taxes. We know that most of the time our money is taxable right away, like earnings from employment or interest on savings. But with individual retirement accounts, the taxes can be deferred. There's also tax-free money, like municipal bonds, life insurance proceeds, and 529 education savings plans. You should try to move as much taxable money as you can to the tax-deferred or tax-free categories.